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Absolute Software Corp. shares jumped 2.7 per cent in the early going Friday after RBC initiated coverage of the stock with an “outperform” rating and called the maker of computer-theft-recovery software a “cash machine.”
Analyst Robert Breza figures the company should grow sales contracts in the 40 per cent to 50 per cent range during the next few years and achieve a nearly 25 per cent 10-year compound annual growth rate as it continues to take share in a green field market.
The price target was set at $42 and, even though the shares have climbed rapidly to north of $34 from $6 during the past 12 months, he figures the stock is “undervalued,” primarily because management’s goal of four million subscribers for June 2009 is “conservative.”
He also urges investors to evaluate the stock on sales contracts or bookings and cash flow metrics based on its sales model versus traditional revenue and earnings multiples, which are lagging indicators for Absolute.
The stock has gained 90 cents to $34.60 on the TSX.
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